Question

LO 8.4What causes the variable overhead efficiency variance?

Answer 1

Answer:

The generally varies according to variation in production levels.  

Explanation:

First, we will determine the overhead efficiency variance:

variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard Rate

The change that makes a variation in variable overhead is the actual quantity. The actual quantity is based on the allocation base, it can be direct labor hours, direct machine hours, direct labor dollars, etc.

The generally varies according to variation in production levels.